The Bundestag election results confirmed that Germans would like Chancellor Merkel to continue to look after them. Angela Merkel got a clear mandate, but not a blank check. Talks with potential coalition partners will be difficult. The results for both the Greens and Social Democrats fell well short of expectations. This forces those two potential coalition partners to delay any potential deal with the Chancellor. Negotiations will last long. They could cause some anxiety among Europeans and international investors, who would grow nervous if there is a political stalemate.

Most European partners, including French President Francois Hollande and Italy’s Prime Minister Enrico Letta, hope that won’t be the case. They have already congratulated Merkel. There is palpable relief in European capitals. Germany will get a pro European government, regardless of the outcome of negotiations between different parties. The FDP will hardly be missed. In the past, its leadership had repeatedly speculated about a possible exit and/or other punishments for profligate Southern Europeans. Many partners perceived the FDP as a risk factor within the German government, rather than a pro European anchor. The attempts by German Foreign Minister Guido Westerwelle to correct that image were not fully successful.

However, it would be a mistake to expect a softer Chancellor Merkel in a coalition with the Greens or, more likely, with the SPD. Merkel will largely stick to her signature step-by-step approach of conditional aid. Any negotiations on future bailouts would follow a well-established pattern. Much more interesting is how she will deal with the banking union.

German foot dragging on this project could have serious consequences and test the close relationship between Merkel and the head of the European Central Bank, Mario Draghi. In order to preserve its own credibility, the ECB needs to be able to make a strict asset quality review of banks before becoming the single supervisor in the second half of 2014. But, in order to test the strength of banks’ balance sheets, the ECB needs a financial backstop, and only euro area governments can provide that. In the coming months, Merkel has to decide whether she is willing to build a strong and common resolution mechanism and fund. This is the most important task the euro area faces.

If Merkel is distracted by long and tough negotiation with potential coalition partners, the timetable could slip. Furthermore, the remarkable success of the anti-euro party, Alternative for Germany (AfD), could make matters worse. Since the founding of the post war republic the Christian Democrats have never accepted the existence of a party to their right. The CDU/CSU will try to neutralize and reabsorb AfD voters, ideally before the upcoming European Parliament elections in May 2014. Christian Democrats can only succeed if they accept some degree of euro criticism within their own ranks. All this could create uncertainty in a very delicate phase for the common currency.

It is precisely the ongoing uncertainty that worries German employers. On the day after the election, the head of the Voice of German Industry (BDI), Ulrich Grillo warned politicians that a long political stalemate could be poisonous for the economy. Grillo cited deeper integration of the euro area as one of three main tasks for the next government. He further stressed that Merkel needs to tackle the energy transition and address concerns of consumers and companies about rising energy prices. From his perspective, the government’s energy policies should be overhauled “radically” ― hardly a ringing endorsement of what has been done so far. He also said that Germany needs more investments.

Overall, the private sector fears that the election result could force Merkel to shift towards the left in order to secure a stable majority in the Bundestag. For now, we are still a long way away from there. As her party faithful celebrated a historic victory on Sunday night, Merkel realized that voters have dealt her with a very tricky hand.